AIM-listed PME African Infrastructure has sold its 49.5% stake in mobile operator Econet Wireless Burundi (EWB) for US$15m.
The deal was carried out after PME’s joint venture partner in the carrier, South African telecom holding Econet Wireless Group…
AIM-listed PME African Infrastructure has sold its 49.5% stake in mobile operator Econet Wireless Burundi (EWB) for US$15m.
The deal was carried out after PME’s joint venture partner in the carrier, South African telecom holding Econet Wireless Group (EWG), exercised its option to buy out PME.
No financial advisors were involved in the transaction.
PME invested in EWB in September 2008 to help the operator launch commercial services the following April.
The fund paid a nominal fee of US$50 for the stake and provided another US$10m in equity investment.
This took the shape of a mezzanine debt with a target hurdle rate of return of 40%, which was achieved by the time of PME’s exit.
“PME’s investment in EWB was a short/medium term opportunistic investment for PME based on the premise that Burundi’s mobile voice market needed the impetus from a well capitalised operator in order to allow the market for mobile voice services to embark on the same phenomenal growth path which its neighbouring countries are currently experiencing,” PME investment director Eric de Moudt said in a statement.
Even by Sub-Saharan standard, Burundi has a very low mobile penetration, with only 6% of the population owning a mobile subscription according to The Mobile World.
In this country of nearly 9 million people, Orascom is the market leader with nearly 600,000 users. Far behind lag the state-owned OnaMob with 138,000 users and Africell (known as Tempo) with 67,000 users.
This creates a clear opportunity for a newcomer like Econet, which will now rely on the backing and experience of its parent company, EWG. The latter was founded by Zimbabwean entrepreneur Strive Masiyiwa and has interests in Zimbabwe as well as Kenya, Botswana and Lesotho.
Already, Econet Burduni has signed up 34,000 users and is working on the second phase of its network rollout.
The operator is also one of the first to launch ZTE’s newly-launched solar-powered mobile phone, following closely on the heels of Lap Green’s Uganda Telecom.
However, competition could be set to increase if the state goes ahead with plans to privatise Onatel/ Onamob, as previously reported by TelecomFinance. In addition, two other operators, LaCell and Hits Telecom, own licences but have yet to launch.
PME remains on the lookout for opportunities in the data telecom sector in Sub-Saharan Africa.
The group, which is led by HSBC and BoA investment veteran Richard Bouma, currently has telecom interests in Uganda and Tanzania, where it recently cooperated with TMP – a former Telenor-backed venture – to set up Dovetel and The Broadband Company.
Dovetel offers CDMA services in Uganda, while The Broadband Company plans WiMAX services in Tanzania.
